SUPPORTLINE by FONG MIN YUAN

BOILERMECH Holdings Bhd pushed past the uppermost 200-day simple moving average (SMA) on Wednesday as it hit a session-high of 76 sen. This breach gives the counter a more bullish outlook as it attempts to decisively pull away from the consolidation mode it had been trapped in since midJune. On June 11 and 12, the stock surged to a trading high of 77.5 sen, a breakout that lent hope that the share price would return to a sustained uptrend. However, the positive momentum soon faded and the stock corrected to a low of 67 sen and entered a period of sideways trading. There have been intermittent surges in the share price performance, but the strong pullbacks dissolved hopes of extended growth. Nevertheless, Wednesday’s push put its within reach of the immediate resistance of 77 sen and turned the momentum indicators positive. The slow-stochastic momentum index shows growing strength as the per cent K oscillator crossed the per cent D oscillator to issue a “buy” signal while resting at 31 points. The 14-day relative strength index has crossed into overbought territory at 74 points but remains rising at a sharp angle. The daily moving average convergence/divergence line, which was previously falling, has rebounded off the zero line to return to an upward trajec- tory, suggesting a resumption of strength. Investor interest in the counter remains the strongest since the breakout in June, suggesting a strong push behind this rally. Nevertheless, the historical price chart shows that the counter is prone to subside just as quickly after a strong rally. Should this be a repeat performance, support for the counter lies at 72 sen although stiffer support is pegged to the convergence of SMA lines at 70 sen.

The comments above do not represent a recommendation to buy or sell.

Note: This article first appeared in StarBiz Premium yesterday.